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G.G. v. Valve Corp.

United States District Court, W.D. Washington, Seattle

April 3, 2017

G.G., A.L., and B.S., individually and on behalf of all others similarly situated, Plaintiffs,
v.
VALVE CORPORATION, Defendant.

          ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION

          JOHN C. COUGHENOUR UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Defendant Valve Corporation's motion to compel arbitration (Dkt. No. 10). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS the motion for the reasons explained herein.

         I. BACKGROUND

         Plaintiffs allege that Defendant, through its Steam Marketplace platform and video games such as Counter Strike: Global Offensive (CSGO), supported “illegal gambling” by “allowing millions of Americans, including Plaintiffs, to link their individual Steam accounts to third-party websites” and by “allowing third-party sites to operate their gambling transactions within [Defendant's] Steam marketplace.” (Dkt. No. 1-3 at ¶ 3.) Plaintiffs allege that Defendant “created this gambling system by creating a virtual currency called ‘Skins, ' which [Defendant] sells for a fee” through the Steam marketplace. (Id. at ¶ 4.) Plaintiffs allege that third-party gambling websites created automation software (bots) accounts to modify or automate the Steam marketplace for trading and gambling Skins with Plaintiffs and other Steam subscribers. (Id. at ¶¶ 7, 43, 96.)

         To use Steam, a user must first create a Steam account, which requires accepting the Steam Subscriber Agreement (SSA) at issue in this case and motion. (Dkt. No. 11 at ¶ 6.) A Steam account cannot be created unless the subscriber accepts the SSA. (Id. at ¶ 8.) After setting up a Steam account, a user may purchase subscriptions to CSGO or other video games after again agreeing to the same SSA. (Id. at ¶ 11.) Users also agree to the same SSA when they purchase Skins while playing CSGO. (Id. at ¶ 13.)

         The SSA grants users a license to use Steam and the content and services available on Steam, such as CSGO and Skins. (See Dkt. No. 11-7.) The SSA has a binding and conspicuous arbitration agreement in Section 11, which states that subscribers and Defendant

agree to resolve all disputes and claims between [them] in individual binding arbitration. That includes, but is not limited to, any claims arising out of or relating to: (i) any aspect of the relationship between [them]; (ii) this agreement; or (iii) [a subscriber's] use of Steam, [a subscriber's] account or the content and services. It applies regardless of whether such claims are based in contract, tort, statute, fraud, unfair competition, misrepresentation, or any other legal theory.

(Id. at 11.) The arbitration agreement states that the arbitration “will be governed by the Commercial Arbitration Rules of the American Arbitration Association” (AAA). (Id.) However, the arbitration agreement excludes “claims of infringement or other misuse of intellectual property rights . . . and claims related to or arising from any alleged unauthorized use, piracy, or theft.” (Id.) Unauthorized use is not explicitly defined in the SSA, but Section 4 states, “[Subscribers] may not use cheats, automation software (bots), mods, hacks, or any other unauthorized third-party software, to modify or automate any Subscription Marketplace process.” (Id. at 7.)

         Plaintiffs, minor children who signed the SSA and their parents who did not sign the SSA, brought this case, alleging violation of the Washington Consumer Protection Act, violation of the Washington Gambling Act of 1973, unjust enrichment, negligence, and declaratory relief. (Dkt. No. 1-3 at 31-39.) Defendant filed a motion to compel arbitration pursuant to the SSA. (Dkt. No. 10.) Plaintiffs opposed the motion, arguing (1) the SSA is unenforceable based on contract defenses; (2) Defendant cannot enforce the SSA against minor Plaintiffs; (3) Defendant cannot enforce the SSA against the non-signatory parent Plaintiffs; and (4) Plaintiffs' claims deal with the unauthorized use exception and are not subject to the SSA. (Dkt. No. 27.)

         II. DISCUSSION

         A. Standard of Review

         Section 2 of the Federal Arbitration Act (FAA) makes agreements to arbitrate “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA reflects a “liberal federal policy favoring arbitration.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). However, Section 2 provides that arbitration agreements may be invalidated by generally applicable contract defenses, including unconscionability. Id.

         The FAA requires courts to compel arbitration if (1) a valid agreement to arbitrate exists, and (2) the dispute falls within the scope of that agreement. Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If both of these two requirements are fulfilled, then the FAA “leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration.” Id. As such, “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 626 (1985) (internal quotes and citations omitted). If the Court determines that the claims are subject to arbitration, the Court should “stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement.” 9 U.S.C. § 3.

         Pursuant to the SSA's choice of law provision, Washington law governs the existence and interpretation of the arbitration agreement at issue. (See Dkt. No. 11-7 at 10.) Washington has a substantial relationship to the parties and no other state with contrary policy interests has a materially greater interest in the outcome of this dispute than Washington. See Erwin v. Cotter Health Ctrs., ...


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